This will happen if the table contains an existing record with an id of 0 (or negative). Updating all existing records to use positive values will allow auto_increment to be set on that column.
Edit: Some people asked how that 0 got in there. For clarification, the MySQL Reference Manual states that "For numeric types, the default is 0, with the exception that for integer or floating-point types declared with the AUTO_INCREMENT attribute, the default is the next value in the sequence." So, if you performed an insert on a table without providing a value for the numeric column before the auto_increment was enabled, then the default 0 would be used during the insert. More details may be found at https://dev.mysql.com/doc/refman/5.0/en/data-type-defaults.html.